Try India, China, and Brazil. Your editorial blatantly TELLS LIES about the reason unemployment is so high, blaming the laid-off victims instead of placing the blame where it belongs, on the traitorous American corporations that have outsourced and offshored 15 million jobs since 1989. Coincidentally, that's the same number of people who are unemployed! U.S. corporations are enjoying record profits, hoarding over $1 trillion in cash. They've already begun shifting those profits into investments in "emerging economies," such as the billions that GE recently pumped into Communist China.

Shame on you for calling millions of laid-off Americans "unproductive." When 5,000 manufacturing plants were shut down and the jobs moved overseas, how is that the fault of the American workers who lost their jobs in the process? When entire categories of college-level jobs from reading Xrays to transcribing doctors' notes have been outsourced overseas, how is that the fault of the laid-off workers? The Nazis knew your trick very well: tell a lie loud enough and long enough and stupid people will believe it. So what's your solution for the millions of people who can't find jobs? Wait, I know, genocide.

By the way, where did all our nation's wealth go? For the past decde, $1.75 trillion a year has been wasted on two overseas wars. Not medicare, not food stamps, not unemployment benefits. THE WARS. But of course you neglected to mention that fact.

I think what we're seeing is how foolish we've been for the past few decades to assume that what's good for markets is good for all of us.
It's not like there isn't demand out there. The problem is that much of the demand is for public goods, the kind the market doesn't respond well to.
These "unproductive" laborers could be retrained and put to work on public goods if we could convince the population to tax the ones making money off the market some more. People would be put to work. People would be surviving. Stuff would get done.
But no. That's "socialism."
And the big laugh is that the defenders of the laissez faire market claim that they are the "job creators." And people fall for it, as though it is the duty of the private firm to create jobs. If that were the case, executives would be compensated based on jobs lost or gained. Stocks would go up and down in value based on the surplus of jobs. But that's a laugh- it's just the opposite in real life.
Maybe it's about time people realize that the market, while a vital engine of growth, does not have any special interest in happiness, sustainability, or even survival. The market cannot replace society as a whole.
The market is our institution. We are not its property.

There is a big hole in your commentary and that is all the jobs that have been taken out of our country to cheap labor countries. How could this be left out and your comments still credible? If it is beneficial for a company to establish itself in a foreign country, employ their labor, then ship the products back to this country to sell, then there should be tariffs upon entry to at least try to balance the taxes and jobs that are lost.. These corporations reinvest their profits in foreign countries since they pay U.S. taxes if they bring their profits home.
Further, lets have some commentary on what exactly makes up GDP. I am just an ordinary lay person but I have heard that banking, financial services makes up around 28%-30% of GDP, a percentage that used to belong to manufacturing, which now is around 11%. Are all the trading of paper, CDS, etc., which produce nothing, adding to the GDP?

The increase in productivity is rarely mentioned as a reason for unemployment, but it certainly is. Since the mass layoffs, those who are not laid off are learning to do additional work to cover for the laid off guys, which would require everyone to work more efficiently. Now that the economy is on the rebound, just why would companies hire two people again when one person can do the work of two people?

As other comments have stated though, it is a bit odd to see this article leaving out outsourcing as the reason for high unemployment rates.

Productivity went up because of FEAR. Everyone I know is working longer hours, not taking time off, doing everything they can to make sure their boss has no reason to put them on the future lay off list. My friends who work remotely have it worse they are hooked to their laptops 24/7. Still some have received the dread call in to hear they need to train their replacement in India if they want severance. So enough with this crap of blaming the unemployed. Face it Corporations are loving the fear and loving the cheap labor pool. The only people getting raises and bonuses are VPs and up everyone else is hiding under their desk desperately over working. It's laissez-faire capitalism in all its uncaring glory .Just admit to it and own up to it not make BS that its other peoples fault and that corporations are really caring. We may have gone to public school but we're not idiots, except for the Faux News crowed they will eat what your slinging.

Cowen notes "If a business owner fires 10 people and a year later output is almost back to normal, it's pretty hard to make the argument that they were doing much in the first place. " Not quite...only if you use a corporate measure of effiiency. In the old days, this slight-of-hand was accomplished by speeding up the assembly line and creating health issues with the workers. Now corporations just cut people, overloading the workforce in place and creating similar problems...Coupled with cut pension payments and health insurance payments, workers are forced to do more with less..and get less take-home for it. The upshot is an unhealth workforce with low morale. Good capitalist outcomes.

Cowen notes "If a business owner fires 10 people and a year later output is almost back to normal, it's pretty hard to make the argument that they were doing much in the first place."

Or the company has simply decided it can get by with an inferior product.

"We didn't need all those news bureaus anyway, we can just get someone else's story off the internet."

Or if the company just decides it can pass on the work of 20 people to the ten left, and if they burn out, they can always get ten more off the unemployemnt ines.

Cowen and Lemke, I hope you both get familiar with unemployment really soon, you arrogant twits.

Just what the frak do you two "produce"?

I've never understood why people assume that the "natural state" of unemployment is around 5-7% of people. We're increasing teaching computers to perform people's job and millions of former rice farmers are joining the international workforce every year. (And, frankly, good for them. Americans and Europeans aren't the only ones who deserve basic standards of living. It amazes me that this "Never do business with a poor Bangladeshi" form of bigotry is still acceptable.) If we want to create more jobs we need demand for new products and I can't think of a major new industry that has grown since web development. Frankly, I'm not sure how 90% of this country remains employed as it is.

One part of the article struck me as a bit exaggerated (and perhaps slightly contemptuous of the unemployed), though:

"Before the financial crash, there were lots of not-so-useful workers holding not-so-useful jobs. Employers didn't so much bother to figure out who they were. "

I somehow doubt there were individual workers who really produced nothing. I bet there was simply a lack of efficiency over all operations, which they didn't bother to remedy in good times. When times got tough they looked to get the job done by the minimal number of employees who could do it. Both then and now, very few companies (with the exception of Google, which has a limitless cash cow in search/ads and engages in other endeavors just for the fun of it [this is a slight exaggeration]) would hire people who wouldn't contribute to the bottom line. Hence it seems unlikely that they ever employed useless workers, or that they would now hire workers back once they've found that they can do without them.

(I should also note that the "Corporations" being run by people, probably do like hiring a lot more than firing, hence they probably have inefficiencies even now. Unfortunately except for a few examples, like possibly Google or the all-powerful Mother Bell of bygone days, companies cannot hire unless it will have a foreseeable impact on future profits (i.e. necessary replacements) due to responsibilities to higher-ups/shareholders.)

It is possible that companies are simply producing inferior products nowadays, as someone suggests above, which would imply that they are likely to hire in the near future. However, I cannot claim to have seen any evidence of this.

DUH!!!!! TRY dropping the price of gasoline to 99/9/10 @ a gal. see what happens to our economy????

This was an interesting article. It basically argues that the Luddites were right. That Capital can replace Labor. Our machines are now efficient enough not to need as much labor. It does not address Globalization of the Economy. Particularly labor.

I was recently at a conference where some one was explaining that Indian Radiologist were replacing American Radiologist. The X-rays and other tests have to be taken where the patient is but they can be "read" anywhere. Some of our best and brightest, our most highly educated are being outsourced.

My objection to this article and a lot of the commentary is that it is a done deal. Set back and except it. There is nothing to be done. While I admit that you have to define the problem before you can solve. I am not seeing any of these bright ivory tower professors and think-tank gurus (with jobs) figuring out what to do about it.

America has the largest manufacturing sector in the world, we produce more goods than China. The problem is that we also employ a fraction of the workers, on an efficiency measure, we produce more goods with far fewer workers.

http://www.npr.org/blogs/money/2010/10/08/130436221/the-friday-podcast-buttons-and-other-connectors

People have been replaced with machines in United States, and those jobs aren't coming back. Protectionist political rhetoric like blaming other countries for the rise in unemployment is fruitless. As such, America will sustain large amount of unemployment for some time. The closer we get to singularity the more our way of living now will be seen unrealistic and needed replacing by another system.

First off, I am on a spending strike as anyone else should be who despises these smug self righteous social darwinists who think they are untouchable. A lot of people I see complaining on these boards thought they were untouchable until they hit age 40.

SO BOYCOTT EVERYTHING. That is, everything made in China....which is BTW EVERYTHING. I guess the French and Spaniards are the only ones not stupid enough to outsource their key products. Chorizo and Champagne made in China? Don't think so.

And I know it is impossible to totally boycott some things (like Gas) but you can cut back 75% from what you used to do.

I just don't buy that the cost of doing things here makes the prices that unaffordable for most people. Most clothing was manufactured in expensive Manhattan (with loads of graft being paid to underworld figures) and yet somehow, everyone was still able to afford the stuff. It is greed pure and simple in that when one firm does it, they all fall like dominoes.

This is why the consumer just has to get with it and decide they would rather have one thing made here than 100 crappy things made there.

Economists are making a big mistake by analysing the USA in aggregate. We do not analyse "the EU" in aggregate, we know when Greece is in trouble and Germany is relatively OK. The housing bubbles and crashes were NOT all over the USA, and the economic fallout is NOT the same all over the USA, just as States within the EU that did NOT make stupid policy mistakes, are still relatively sound.

Short moral here is, California needs to learn from Texas - and so does the Federal Government. Texas, analysed separately, is one of the strongest economies in the world today, on par with Germany and Switzerland. (Look at the blogs, "Texanomics" and "Houston Strategies"). On the other hand, California would be down there with Ireland and Spain. And it may yet get a "bailout" courtesy of the "conservative" States - or the "conservative" States may rebel.

This discussion completely misses the fundamental point: the web of treaties and laws put in place over the last 20 years now make it easy and profitable for companies to shift old jobs overseas and to create new jobs overseas. Plus in selected areas like IT, use of contract H1B workers have gutted the market for Americans.

And automation continues at a ferocious pace. Many new companies require few people to create them and run them, e.g., Facebook.

Plus age discrimination is rampant for workers over 50, regardless of experience and skill, and there is no recourse except to suffer.

Bottom line: your analysis is way too optimistic. The true unemployment rate is going to stay at 16% or more (U6 ... forget about the silly U3 number) indefinitely, especially since we continue to add over 3 million Americans per year (over 27 million in the last decade).

Here's a thought experiment: imagine you had a magic wand and with one wave you could instantly retrain/educate all the unemployed workers in the country. What would you train them for? The jobs just aren't there and won't be there. The sad truth is that Americans are now becoming part of the vast global oversupply of people for whom there is no meaningful work.

http://www.foreignaffairs.com/articles/67046/robert-c-lieberman/why-the-rich-are-getting-richer

First of all, RAND is clearly right that the issue surely was less that there were millions of completely unproductive workers as that corporations have just found a way to shift most of the productive things that they used to do onto the shoulders of the remaining employees. And everyone is clearly right that some of these functions have been outsourced out of the US rather than being eliminated--which just proves that workers elsewhere are cheaper, not that the fired US workers never contributed anything of value at all.

The authors also miss the real possibility that some of the workers eliminated were productive, just in ways that do not show up immediately. Think R&D, risk management, legal compliance, quality control, brand management, community relations, internal morale, etc. Cutting back investments in those areas (and overloading a smaller and increasingly stressed out workforce) may harm the enterprise's long-term prospects and growth even if last year's P&L statement looks pretty great. It's way too soon to evaluate such effects--or to reach the insulting and rather unlikely conclusions that millions of hardworking people were making no contribution at all, and that their employers were blindly throwing money away by employing them. Really.

Why not just be content with the observation, which is undeniably fair, that the last couple of years prove that it is possible to run American business, at least in the short-run, in a much leaner and more efficient way?

The first thing this brought to mind was: what does the idea of ongoing high unemployment among the low skilled say about projections for the number of hispanics in the U. S. by 2050? When those projections first came out, I argued that they relied too heavily on expectations of unlimited economic growth in the U. S., which obviously isn't happening.

Second thing: Unemployment isn't 10% -- the government's measure of unemployment is 10%. Real unemployment is more like 20%, and I wish the media would be more honest about that.

"Latino immigrants have left the country in large numbers since the start of the financial crisis. " Says who? The shill from the Chamber of Commerce who used to go on Lou Dobbs and say we were going to have a labor SHORTAGE?
I'm in one of the poorest counties in California and we've got Mexicans pouring in here like it's a Gold Rush (because it is--lots of them are pregnant). The official unemployment rate is 22% and we've got 40% down the road, thanks to the enviros who took away the ag water to save the fishies. Nobody is going anywhere, because we're feeding them.
We could have, and should have, solved a big chunk of this already, WPA style; I suppose the Repubs are against anything government-funded, and the Dems won't let you pick up trash unless it's superdeluxe union scale all the way down the line. We can't afford that right now, so I guess we'll just go "Third World"; wait and see us turn into Mexico in a few years.

For our glorious leaders to continue great progress we must accept minor suffering? it is true!

You might have no work, no money for home or food, but rejoice! your struggle will help the great master plan!

Don't give up hope! Struggle and toil for the prosperity of all! and we will be made a great nation.

good evening citizen.

How about the fact that most companies saw volume of orders and units sold drop off by about 40%. When this happened, especially in America, companies cut the workforce to the bone. Many of those companies started to see a return to profitability toward the end of the recession, but on a much lower order volume, unit sales, what ever measure you want to look at.

Couple that with the fact that the level of sales in America were artificially high as they were being pumped by the perceived wealth resulting from the housing bubble.

We need to look at employment levels on a number of jobs basis before the bubble really started to heat things up and use that as the base line to measure "return to normal"

Still wont be a pretty picture for those out of work. At least they will understand that they are not able to get that high paying job because consumption levels are no where near what they were in the bubble and not because their jobs were fake.

Lets try a different narrative. We're just emerging from the most difficult economic crisis we've faced since the Great Depression. The recovery has been extremely slow, due in part to how this crisis has effected the banking and credit markets in particular. Positive indicators, while evident, have emerged slowly, often accompanied by bad news and uncertainty. Still, things are improving. Many businesses are increasing output and consumption is up. But, because there is still uncertainty, management is hesitant to hire new workers. So they respond by increasing overtime for hourly employees and the workloads of salaried workers. This is a safe short term bet because it increases productivity without the expense of hiring new employees. Due to increased overtime for hourly workers, earnings per hour are up. However, in the long term, employees will not be happy working mandatory overtime and having increased workloads. Eventually and gradually management will have to hire back workers as the economy continues to recover. This is reflective of the enduring cyclical nature of economic activity. To suppose that todays high unemployment numbers are the result of some permanent and intractable change in our economy that took place in the last three years is to ignore the always changing and and cyclical nature of the economy. It is the same fallacy that led people to buy real estate at the top of the market and is currently leading people to buy gold at $1300 an ounce.

There also have been migrations out of expensive urban areas and into smaller and less expensive ones, such as Austin, Salt Lake City, and northern Virginia....
_____________
Northern Virginia is less expensive? Than what? What planet are you people from?

very true, people are possibly taking lower paying jobs, moving home etc. For a comedic take on these issues check out Bureaucracy for Breakfast on Tumblr, very funny blog!

Most of the comments made here by posters are cogent, and point out flaws in the authors' premise. Taking a different tack, and accepting the premises for the sake of argument, consider this quote from the article: "Their productivity may not be literally zero, but it is lower than the cost of training, employing, and insuring them." Note the reference to insuring employees. That cost is high, and soaring. Mathematically, more and more employees will cross that divide and become more expensive than they are worth because of the soaring cost of insuring them, even if the other costs stay exactly the same. Then note that an example of a prosperous country is Germany, despite high wages. What's the difference? German companies don't have to insure their workers, because single payer / universal health coverage is not a business cost. Then note that the reason the car companies got into so much financial trouble (aside from bad strategy and design,) is that they had huge insurance bills. The obvious conclusion is that a single-payer universal health plan would improve the economy. As usual, the allegedly pro-business party, the Republican Party, has policies which are destroying our economy and hurting the businesses which drive our economy.

Articles like these dwell on the intricacies of money and commerce, but avoid core concepts like: A) the Earth is finite and B) the economy keeps operating as if the Earth isn't finite. Something has to give, and it probably already has.

Why are people so slow to realize that physical limits ultimately govern the size of the economy? The idea that the economy can GROW forever, pulled along by population growth, is the current model for progress, and most people still don't question it. But it's fundamentally at odds with FINITE quantities of land, water and resources that define what the Earth actually is. The economy isn't some discrete entity you can detach from nature. Human commerce wouldn't last a day without natural systems that seem free to us but are worth countless trillion$ when analyzed.

The bulk of the economy's size was built on fossil fuels, and oil may already be peaking globally (it peaked around 1970 in America). Most infrastructure was constructed with ancient oil & coal capital, not real-time income, i.e. energy directly from sunlight (or secondary solar power sources like falling water & wind). Nuclear fission is essentially a fossil fuel technology, since uranium is finite Some economists think the 2008 oil price spike was a precursor to global Peak Oil, and triggered the recession by crippling trade schemes based on cheap oil. Food distribution is almost entirely at the mercy of oil.

The whole idea of "job creation" has always seemed unnatural; indicative of too many people with nothing to do (which this article did touch on). The term "useless eaters" may seem extreme but it's largely accurate in describing a planet overflowing with nearly 7 billion people, and a net gain of over 75 million each year. Nature doesn't OWE a living to endless numbers of people, and nature is what keeps us alive, not dollars. We should respect its limits instead of always trying to push boundaries.

We immediately call it "overpopulation" when other species behave like Man, but with people, the assumption is that endless numbers of jobs need to be created to sustain however many people are born. Again, the planet is finite, so when does that perpetual growth cycle end? When does balance and a steady-state system finally take over, as it eventually must, unless we find another habitable planet?

Money, which economists see as the center of the universe, is just an artificial means of compensation invented for human convenience. People don't actually "produce" anything that didn't already exist in nature. Money makes it seem like we're adding to the physical volume of resources, rather than just manipulating resources for human convenience.

As a measure of true value, money can only work long-term if it acknowledges the physical world it was born in. We either need a steady-state economy (instead of perpetual job-creation) or we need to find another planet or two.

Why the good news about the economy doesn't necessarily mean that jobs are coming back anytime soon. Exactly what happened to me. I worked for a small business and things improved so dramatically that they sang my praises. But people forget. "The simple Keynesian explanation for the initial unemployment is that aggregate demand -- the country's combined spending and investment -- has been too low. But it's unlikely that spending is the only problem, as unemployment is too high and too persistent relative to similar episodes of disinflation in recent history. If weak demand was the main problem, profits should be collapsing too, but they are not lazy ovaries. Investment and corporate profits have been fine for some time now, and they are broadly within the range of pre-recession estimates. " necessary replacements) due to responsibilities to higher-ups/shareholders. ) It is possible that companies are simply producing inferior products nowadays, as someone suggests above, which would imply that they are likely to hire in the near future. However, I cannot claim to have seen any evidence of this.